NYMEX Oil Futures Waver Ahead of API Inventory Data

Liubov Georges
By  Liubov Georges , DTN Energy Reporter

WASHINGTON (DTN) -- Following sideways trade for most of Tuesday's session, oil futures on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange settled mostly lower as investors weighed a fresh batch of mixed U.S. economic data showing consumers unease with rising inflation and declining home sales against reassurances from Federal Reserve officials that soaring prices will not derail the economy's post-pandemic recovery.

Sales of new U.S. homes declined more than 5% in April to 863,000, according to data from the Census Bureau compared with expectations for 955,000 sold units. March figures were also revised lower to 917,000 from the previously reported 1.021 million.

The key driver behind weaker-than-expected sales figures is believed to be soaring prices for new and existing homes triggered by pent-up demand combined with massive government stimulus. The median new house price jumped 20.1% from a year earlier to $372,400 in April. The Federal Housing Finance Agency House Price Index soared 13.9% in March against the previous year.

Consumer unease with rising inflation was apparent in Tuesday's release of consumer sentiment, with the index falling in May for the first time in four months.

"Consumers were less upbeat this month about their income prospects -- a reflection, perhaps, of both rising inflation expectations and a waning of further government support until expanded Child Tax Credit payments begin reaching parents in July. Overall, consumers remain optimistic, and confidence should remain resilient in the short term, as vaccination rates climb, COVID-19 cases decline further, and the economy fully reopens," said Lynn Franco, senior director of Economic Indicators at The Conference Board.

President of St. Louis Federal Reserve Bank James Bullard said in an interview Monday that higher inflation was "not really a surprise."

"I think there will come a time when we can talk more about changing the parameters of monetary policy, I don't think we should do it when we're still in the pandemic," Bullard told Yahoo Finance, adding "we're not quite there yet" in terms of discussing any changes in Fed policy.

A trio of U.S. Federal Reserve officials, including St. Louis Fed President James Bullard and Fed Governor Lael Brainard, reiterated Monday that the pace of inflation will eventually moderate into the year's end as bottlenecks ease.

Tuesday afternoon, traders also positioned ahead of weekly release of U.S. inventory data, starting with the survey from the American Petroleum Institute at 4:30 p.m. EDT.

Consensus calls for U.S. oil inventories to have fallen by 900,000 barrels (bbl) in the week ended May 21, although estimates range from a decrease of 5 million bbl to an increase of 3 million bbl. Gasoline stockpiles are seen falling by 1.3 million bbl from the previous week, while stocks of distillates projected to have fallen by 1.5 million bbl. Refinery use likely rose by 0.2% to 86.5% of capacity.

On the session, NYMEX July West Texas Intermediate finished flat at $66.07 bbl, and the international crude benchmark Brent contract for July delivery gained 19 cents for a $68.65 bbl settlement. NYMEX June RBOB futures settled unchanged at $2.1173 gallon, while June ULSD futures fell 0.66 cents to $2.0354 gallon.

Liubov Georges can be reached at liubov.georges@dtn.co

Liubov Georges